Subject: S7-5-99 Comments
Author:
Date: 4/7/99 6:40 PM
MASF.net
1710 E. Division St.
Evansville, IN 47711
Jonathan Katz
Secretary, Securities and Exchange Commission
Mail stop 6-9
450 Fifth street, NW
Washington, DC 20549
April 6, 1999
Re: Subject File No. S7-5-99
Dear Mr. Katz:
I support the proposed amendment to Rule 15c-211, however I would like
to make following suggestions:
1) Instead of requiring broker-dealers to make issuer information available
to anyone who request it, the burden of providing issuer information
should be on the issuers and not the broker-dealers. For OTC B/B securities,
the public already have access to the EDGAR. By requiring broker-dealers
to provide print copy of EDGAR filings to the public or to other broker-
deals, broker-dealers will incur unnecessary cost. For Pink Sheet
securities, the new rule should require the issuers provide required
information (copy of 15c-2-11 and two years of financial statement - to be
updated on quarterly basis) to the public, who made written request to
them. Ideally, these required information can be published on the EDGAR
for public access.
Currently, for non-reporting companies, the public can not even
obtain total number of shares outstanding or most recent financial
statements from any independent source other than the issuer. Fraud can
be prevented only if the public have access to these important information
from a reliable source such as the EDGAR. Any issuer involved in fraudulent
activities is unlikely to provide accurate information to the broker-dealers.
2) I believe that the microcap fraud problem is primarily a retail sales abuse
by broker-dealers and by company promoters disseminating false and
misleading information. Therefore, it make sense to require all broker-
dealers to conduct due diligence before making a price quotation because
broker-dealers may be able to discover potential fraudulent activities. The
new rule should require broker-dealers report fraudulent activities that
they discover to the State Securities Commissions, the NASD and or the
SEC.
3) The annual review should apply only to non-reporting companies,
most of which will be traded on the Pink Sheet, because information for
reporting companies is available on EDGAR.
Sincerely,
Aaron Tsai
President